White Hat Management's founder says he's through bailing out the charter-management company

White Hat Management, a major for-profit charter school operator, is fighting for its life. At least that’s the story told in a recent memo by founder David Brennan. Brennan told employees of White Hat that his family has committed over $50 million to sustaining White Hat, but that they simply cannot afford to do so anymore. Their financial commitment will only see the company through 2013. Brennan’s memo also pointed out that White Hat has not made a forecast for the bank in the last 5 years, and in order to start to turn things around they must produce in excess of $2 million every year.

White Hat runs 33 schools in Ohio, broken down into three brands: Life Skills Center for dropouts and alternative high-school students, The Hope Academies for elementary and middle grades, and OH-DELA- an online school serving students statewide. The 17 Life Skill Academies have lost more than 1,170 students since 2006-2007 equating to a loss of at least $6.7 million dollars according to a Columbus Dispatch analysis.

Much of the pain that White Hat is experiencing can be attributed to an increase in competition. When White Hat first got in the business of charter schools in Ohio the late 1990s there was very little competition in the charter school market, making it easier to attract students to its schools. Fast forward twelve-plus years and the Buckeye State now has 339 charter schools serving 113,736students. And, as the Akron Beacon Journal also points out, charters are now also facing competition from suburban districts that permit students from other districts to enroll in their schools. Southside Academy (a White Hat school) in Youngstown lost 600 students when some surrounding suburban districts began accepting Youngstown students via open enrollment.

In the midst of this recent crisis White Hat is also tied up in a lawsuit with the boards of ten of its schools, who sued the company for its lack of financial transparency and accountability. The schools want White Hat to disclose how it spends public money on things such as payroll, equipment, and salary. In October a judge ruled that White Hat needed to open its books, but the case has been on hold since.

David Brennan was a pioneer in the charter school and school choice movements in Ohio, and he should be applauded for this. It remains to be seen what the next chapter for him and his schools will hold.